Economics · Economy
In the context of India's external sector statistics, which of the following correctly differentiates Foreign Direct Investment (FDI) from Foreign Portfolio Investment (FPI)?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1FDI represents short-term cross-border capital flows that can be rapidly withdrawn, whereas FPI is locked in for a minimum statutory period.
- 2FDI indicates a lasting interest with significant influence in management of an enterprise, whereas FPI denotes tradable financial holdings without managerial control.✓
- 3FDI is recorded in the current account of the Balance of Payments, whereas FPI is recorded in the capital account.
- 4FDI can take place only through the government approval route, whereas FPI can occur only through the automatic route.
Correct answer
FDI indicates a lasting interest with significant influence in management of an enterprise, whereas FPI denotes tradable financial holdings without managerial control.
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